March 12, 2009
Dear Valued Customer:
Sallie Mae has watched closely as the financial aid community has advocated on behalf of students and their families in recent letters voicing concern about the parent PLUS auction program.
After conducting a thorough assessment of the requirements associated with the PLUS auction program, Sallie Mae has decided not to participate. We reached our conclusion with a firm belief that the best interests of parents and schools will be served by maintaining the current PLUS loan program at least until Congress has a chance to work through the President’s budget proposals for higher education. We have notified the Department of Education and other key policymakers that should the auction move forward we do not intend to bid in any of the 50 states as either a lender or a lender-of-last-resort.
Our decision on the Parent PLUS auction does not change our commitment to make every federal student loan to every eligible student at every school in the United States. For instance, schools and families rely on Sallie Mae for nearly 40 percent of parent PLUS loans made in FFELP and we stand ready to continue to offer these loans to parents should Congress delay the auction or the program fall short.
Our strong preference would be to continue to provide Parent PLUS loans to the schools and families who rely on us for them. The auction’s structural requirements, however, preclude us from participation, and the auction itself will cause a one-year disruption to the process that is currently working, only to potentially change again the following year depending on the outcome of the President’s budget proposal.
To further demonstrate our commitment to providing college access for all Americans, we are focusing our attention on helping President Obama achieve his objective of making college more affordable as outlined in his FY 2010 budget proposals. We pledge to stand together with you, our school customers, as Congress considers the President’s proposals. We feel strongly that common ground can be found that produces the taxpayer savings needed to greatly expand the Pell Grant program, while also preserving institutional choice and the service-focused hallmarks of FFELP that so ably serve students, families and schools. The ongoing success of the Ensuring Continued Access to Student Loans Act in protecting loan access and producing significant taxpayer savings serves as a model for what can be achieved through a public-private sector partnership.
We want to remind schools that, should the PLUS pilot program not produce a sufficient number of qualified bids in your state, the existing parent PLUS loan program will be maintained for the 2009-2010 academic year. This means that you would not need to change the way you process parent PLUS loans. More important, you can help minimize and avoid disruptions to your students and their parents by continuing to reach out to influence Congress as it considers the President’s budget proposals. While we work to improve the student loan program, your institution and your students will be best served by prudently waiting until the legislation process is complete before making significant loan processing changes.
We have scheduled a special Straight Talk event to discuss our latest initiatives, including more details on our assessment of the PLUS loan auction pilot and the President’s FY 2010 budget proposal.
Please join us on Monday, March 23, 2009 at 2 pm ET. You can register for the event at www.SallieMae.com/MarchStraightTalk.
We look forward to your participation. You are welcome to extend this invitation to others on your campus. Thank you for your devotion to students and their families.
Sincerely,
Barry Feierstein
Executive Vice President
Sallie Mae, Inc.